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Stimulus hopes, data bolster Britain's FTSE

Published 10/06/2010, 07:14 AM
Updated 10/06/2010, 07:16 AM
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* FTSE 100 up 0.7 percent, at highest since late April

* Miners, energy lifted by hopes of stimulus

* Autonomy, Sainsbury fall as results disappoint

By Simon Falush

LONDON, Oct 6 (Reuters) - Optimism that governments will act to stimulate economies around the world and better than forecast data helped lift commodity stocks, pushing Britain's top share index to its highest level in over five months by midday on Wednesday.

By 1048 GMT, the FTSE 100 was 41.12 points, or 0.7 percent, higher at 5,676.88 after it had gained 1.4 percent on Tuesday, its highest close since late April.

Miners were the biggest support to the index as gold hit a record high and copper rose to its highest since July 2008 as the demand outlook brightened on expectations that governments would do more to stimulate the economy.

Antofagasta Xstrata, Anglo American and Kazakhmys added 3.6 to 4.2 percent.

Energy firms were also stronger with crude hitting its highest level in five months. Royal Dutch Shell gained 1.4 percent.

The Bank of Japan unexpectedly cut interest rates on Tuesday, supporting a view that other governments will act further to bolster economic recovery.

In the United States, the Institute for Supply Management's index showed the pace of growth in the U.S. services sector accelerated more quickly than forecast in September, while hiring also picked up.

German manufacturing orders rose in August by 3.4 percent on the month, surpassing forecasts.

"Macro stuff like the industrials order number is giving heart to the bulls while the bears are getting squeezed, said Giles Watts, head of equities at City Index. "There's a feeling that the market can keep going higher at the moment."

A survey by the British Retail Consortium showed that a jump in the cost of agricultural commodities drove British shop price inflation to a five-month high in September.

Across the Atlantic, the September U.S. ADP Employment survey, due at 1215 GMT, will come under close scrutiny ahead of Friday's key U.S. non-farm payrolls data.

AUTONOMY, SAINSBURY SLIP

Autonomy was the top faller, down 12 percent after it said it expected to review its full-year internal model with a revenue reduction of around 3 percent. This wiped out most of the 16 percent rise seen in September.

Sainsbury was also among the top fallers, down 1.1 percent, with investors unimpressed by sales at the top end of forecasts.

Sainsbury Chief Executive Justin King said it may "squeak in" at the bottom end of its mid-term underlying sales growth range of 3 to 4 percent.

Among the mid-caps, EasyJet jumped 10 percent after the budget airline said it expected to beat its profit expectations for the year following a strong performance over the summer.

This helped blue-chip peer British Airways gain 3.8 percent, adding to sharp gains the previous day, after it too reported strong passenger numbers.

There is not much in the way of technical resistance at current levels with the April highs around 5,796 seen as the next significant area to breach, said Michael Hewson, market analyst at CMC Markets.

Ex-dividend factors knocked 1.16 points off the FTSE 100 index, with Admiral Group, Alliance Trust, British Land, Capital Shopping Centres, Kingfisher, Weir Group and WPP Group all trading without their payout attractions. (Editing by Karen Foster)

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